How Do Signature Loans Offered by Credit Unions Compare to Peer to Peer Loans

Not everyone can apply for a signature loan from their local credit unions as they only extend loans to their own members. Many, but not all, credit unions generally requires a specific membership such as teachers, wildlife society, and hospital staff. The membership fee is very small so it is easy to become a member. Credit union does charge a lower interest rate and lesser fees compared to traditional banks. You must go to a local credit union branch to apply for the loan. The downside is that the credit union has limited branches so you may not be able to find a branch in your neighborhood.

Unlike credit unions, anyone can apply for a peer to peer loan. Anyone who is interested in getting a p2p loan must first post a listing on the amount that the want to borrow. Many p2p lending platform offers a loan amount of $1,000 – $35,000. You can borrow a higher amount for purposes of funding a small business. You have the option to choose the loan term which can range from 1 – 5 years. P2P loans are not offered at a local branch and can only be applied through an online lending platform. P2P loans make money from the interest and other fees charges like origination fees. The two leading P2P lending platforms are Prosper and Lending Club. P2P loans are unsecured loans so there is no need to provide any sort of collateral or car title.

Peer to peer loans can be used for various kinds of purposes including buying a vehicle, home repair, medical expenses, holiday costs, moving costs and small business costs. P2P loans have lower interest rates compared to credit unions. The interest rate is usually fixed so you will make the same monthly payment for the entire loan term. The lender will not know your identity and they won’t call you to ask questions as with a credit union.

Many credit unions charge prepayment penalty fees but p2p loans do no charge any prepayment penalty fees. You can watch as your loan get funded by investors. You can apply multiple loans if you have a track record of making prompt repayment for the first loan you apply. You can take a survey to get pre-approved for the p2p loan before actually signing up. P2P loan is ideal for those who have bad credit and has been rejected by banks and credit unions.

Like banks, credit unions may take several days to review your loan application before approving it. It will also take some time for the credit union to release the fund. For P2P loan, your listing can stay for up to 2 weeks. The faster your loan get funded, the faster you will see the money in your account.
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